UK – Fear of carbon fallout on portfolios

23 February 2004

The EU’s legislation on carbon emissions will affect company balance sheets throughout the UK, according to the research group The Carbon Trust (TCT). The UK’s stance to cut emissions by 20 per cent by 2010 and the European carbon emissions trading scheme (ETS) is expected to hit company profitability and share prices across all key industrial sectors. “Profit cuts of five per cent for the worst-affected or a five per cent boost for those that benefit the most are anticipated,” according to Tom Delay, The Carbon Trust’s CEO.

Although businesses were already preparing themselves for the effect of the new legislation, fund managers and institutional investors could be caught largely unaware of its impact on their share portfolios. A Mori poll commissioned by TCT revealed that half of investors have never heard of the ETS.